Today, we are talking about how to become wealthy. Focus on the ROI! This bottom line principle is paramount to the wealth creation and, though people generally grasp it, they don’t fully understand it, which is why we decided to break it down and, hopefully, make it easier for all of you who feel stuck and confused. Learn why people get baffled in the same financial situation, what return on investment is, and how to start accumulating wealth.
What You Will Learn About How To Become Wealthy. Focus on the ROI! :
- Why people get stuck and are unable to change their financial situation
- The key to creating wealth
- What return on investment is
- How to calculate it
- The first steps towards wealth creation
Whenever you’re ready, here are a few ways we can help:
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Speaker 1: This is Theriault Media.
Mercedes Torres: So you want to be a real estate investor, but you don’t want to do the work. If there were only a way where someone else could do it for you. Now there is, tune in here each and every Tuesday on The Epic Real Estate Investing Show for Turnkey Tuesdays with your host, Mercedes Torres.
Hello and welcome, welcome to Turnkey Tuesdays. My name is Mercedes Torres and I am privileged enough to be partners in crime with Mr. Matt Theriault, the guy who created The Epic Real Estate empire. For those of you tuning in again, welcome back, my friends, good to see you. For those of you who are new to Turnkey Tuesdays days, let me share. I created this show because with the changing market, I see so many busy professionals that are truly interested in becoming a real estate investor and they’re either way too busy or they just don’t have the time or the desire to do all the work themselves to become a real estate investor.
So we created a podcast that caters specifically to that individual so that we are able to teach you how to do real estate investing depending on a turnkey company that does it all for you. So turnkey means we do it all for you while we teach you how to do what we’re doing and we’re holding your hand through the entire process. Got it? So that being said … Gosh, I have a lot to say. And first and foremost, I just want to say thank you to those fans, so to speak, that reached out to me via email and just send me amazing emails about either the content or something I said that got their wheels to turn. Something sparked their interest and they reached out to me and asked for assistance on, how to jump into their first turnkey real estate investment property. So thank you for the emails, the love, the Kudos and if you have questions or you want to reach out to me directly, you actually can because I will respond to every email and I will, if you schedule a call with me, have a conversation with you about how to buy a turnkey property.
So many people say, gosh, I can’t believe it’s you. It’s actually me. Now, it may take me a day or so, maybe three. Sometimes I answer in an hour or two. But usually, it takes me a few days to get back to you. But I do want to say that it’s been a pleasure to resonate with the people on the show that are just looking for something different. And I have said before the whole reason, Matt and I created Epic Real State and specifically why I created Turnkey is because so many people are afraid to take the first step because they don’t know what they’re doing in real estate investing. So my goal was to simplify it and to break it down in plain English so that the first step or the second to acquire an investment property or even multiple properties.
It’s not so hard when somebody does it for you, hold your hand through the process and explains it to you life becomes so much easier. So I thank you for that and I just wanted to say I’m available for you. Send me an email and I’ll respond. So that said I received an email from a young lady, a young lady is relative, I want to say that she’s probably in her late 40s and her early 50s. I’m not going to share her name because I didn’t ask if I could disclose it because I just got this email yesterday, but she sent me just a heartfelt email and she just flat out said I’m stuck and I’m tired of being stuck and I know that many of you understand what that feels like. I mean, it paused and made me think first and foremost how much courage she had to muster up to acknowledge that she was stuck and then email me to say I’m stuck, is there hope for me? Help me get out.
And second, it made me think how many people are flat out stuck and don’t have anybody to reach out to. Some are stuck in their jobs or careers. Living paycheck to paycheck and they don’t see a way out. I mean they were taught go to school, get good grades and you save and save and save as much as you can and what worked 40, 50 years ago doesn’t necessarily mean that it’s working today. In fact, that concept of working hard, going to school, getting good grades and getting a great job and getting that 401(k) and that IRA for retirement. I mean, it no longer works. It’s a proven system and it is not working and so many of you feel stuck because it’s the constant rat race of you working paycheck to paycheck.
So some of you are stuck in that aspect and others are stuck because they have an amazing job. They make great money, but they’re absolutely miserable because they don’t know how to create additional money to replace their job. And I received this email from this individual and just my heart went out to her because I understood on such a personal level. And I also stopped to think about how many other people are stuck in that same financial situation because they’re just too scared to make a move. Now, I do have some listeners that contact me because they suffer from analysis paralysis. I mean, they spend so many years attending seminars, reading books, listening to podcasts, analyzing and analyzing. And after five years, they’re still analyzing and they’d done nothing. So they’re stuck in a different manner, but they’re still stuck. I mean, is that you?
So I always, when I talk to these people that say, yeah, I suffer from analysis paralysis, I actually laugh because I share with them, I love the fact that you’re stuck in analysis paralysis mode and the fact that you’ve admitted it is a big step. I mean that’s what it takes for an alcoholic to admit themselves into some kind of rehab is to admit that they have a problem, well, it’s the same thing for people that suffer from analysis paralysis. In order to get on a better road, you have to acknowledge what the issue is. And so if you suffer from analysis paralysis and you know you’re stuff because you’re afraid of making the wrong move because you analyzed it incorrectly, well, the fact that you’ve acknowledged it means that somebody can help you. So back to my email lady, I’m going to call her Mary. Let’s call her Mary for this situation.
Mary was stuck because she recently became divorced and her ex-husband was the one who ran the finances. Now she didn’t make off like bandits in her divorce, but she’s not broke by any means, but she admitted that what she had available because she did the math, was not going to take her to retirement and her job, although it was good that wasn’t going to take her to retirement. Her 401(k) and her IRA were just not going to be sufficient for the life that she wanted to live. And by no means does she want to live an elaborate life. But she admitted that she’s not financially savvy because her husband always handled all of the aspects of financing in her home. And she was married for almost 17 years. So she didn’t have to worry in the past and now she’s petrified and what caused Mary to email me was because, well, it’s tax season and she’s preparing all of her documents to take in to her accountant and when she gathered everything, she realized that she had a total of three savings accounts in money markets. She referred to them as little and that’s relative.
But when I asked her what her rate of return was, she says that her savings accounts and money markets were making 1% and she had a couple of stocks that were making less than 4% return. And she went on to say that she heard an episode about a week or so ago about the rat race and escaping the rat race and what that meant. And I kinda shared with our listeners too, you go to our website and download the frustrated investor’s guide to passive income. Well, she did that and she admitted that it was over her head, but she understood the concept of it. So she reached out and she says, “My goodness, where do I even begin?” And so kinda just explain how I often share on the show. The key to creating wealth is to take your lower yielding assets and convert them into assets that are higher yielding ones than what you already have existing.
So the bottom line is, her first question was, what is the definition of ROI and how is it calculated? Now she understood ROI stands for return on investment. Like you understand the underlying factor. She’s done her Google searches, she’s done her background checks the way she called it. “I’ve done a background check on ROI.” But she says I really, really want to understand it because every time I did a Google search it was a little bit too advanced, talking about equity splits and dividends. And so I said you know what? I think her question is one that I often get and while you understand the basis of it, it made me think, oh my goodness, it’s really important that you understand that. So although this episode may be really basic, it’s really important that you understand the meaning of ROI.
How to calculate it, but not just that, it’s truly important that you understand the value of what that means, because if intentionally strive to increase your ROI, it has the potential to be life-changing, So I’m going to help you by just breaking it down and making it as dummy proof as possible in such a good way so that you can take all of your assets and get them to perform to the maximum. So first, the ROI stands for return on investment, but what it is, it’s the most common profitability ratio. ROI is used to evaluate the efficiency of an investment. In other words, how hard is your money working for you? The lower the number of the ROI, the weaker your investment. So the less money you’re making. The higher the ROI is, the harder your money is working for you, meaning the more money you’re making. And multiple higher performing assets have more potential than obviously just one.
So there are many ways to calculate and determine an ROI. The most frequently used method, however, is you divide your net profit by your total assets. So if your net profit is $100,000 and your total assets are $300, $300,000, your ROI would be 0.33% or 33%. Now in real estate, specifically cash flow of properties to calculate the ROI, you take the annual net cash flow after you’ve paid taxes, insurance, management, maintenance, all of that. And you divide that figure by the cash you’ve invested. So let’s take it a bit further. Let’s say, for example, you have $20,000 parked in a savings account, in your local bank. It’s sitting idle there, that’s you’re just in case money and it’s making a whopping. Let’s just say 2% if you’re lucky, that’s at your local bank, right? So if you were to break that down, you’d probably be making roughly speaking about $33 per month.
That’s what you should be getting in interest. And let’s say, for example, you took that same $20,000 and you redeployed, you parked it into something that potentially can make you more. And you bought turnkey cash flowing property that’s making, let’s just say 8%, 10% ROI. Your monthly deposit to your bank is now about $166 per month, roughly speaking. That’s a huge difference from $33 per month for that same $20,000 to $166 per month. That’s huge. And that’s ROI. Ladies and gentlemen now, I’m just doing quick and dirty math here. I’m just not even calculating the tax benefits, the appreciation, the depreciation, there’s a lot more that goes into cash flowing property of an investment property, but I’m just doing quick and dirty math to make a point. And really all you did was you took that same $20,000 that was making nothing at your local bank in that savings account and you redirected it to buy cash flowing property that gives you five times more money.
It’s simple. You just are redeploying or redirecting your money to have it work harder for you. And that’s how you begin to create wealth. As the money starts to compound you build and you build over time and you just keep doing it over and over again and it keeps growing and voila you’re creating wealth. Now it’s not … Doesn’t happen overnight and sometimes it’s not easy, but how hard is it to take money from a savings account to buy cash flowing property for example? After you’ve acquired real estate and you start creating a portfolio, you can start getting really creative. You can start building many portfolios or you can just buy properties one at a time. At the very least, I always tell our clients, look, if you do nothing else just by one cash flowing investment property a year, just one, think about it.
In 20 years you’re going to have 20 properties. It’s really not that difficult to buy one property a year. If you do it right, if you get help and if you leverage the property. Okay, so let’s just say you can’t buy one property a year. Say you buy one every other year in 20 years that’s 10 properties and some of you think you don’t even have the money. Tap into where you could potentially get the money, an IRA, a 401(k) are your stocks performing at maximum levels that are acceptable to you? So really all you have to do is take those lazy assets and my lazy assets, I mean the assets that are underperforming for you and producing a low return for you and turn them into higher performing assets. By doing this one asset at a time, you are on your way to create wealth. Your wealth.
So tonight I recommend that after dinner or maybe even tomorrow morning when you’re having your morning coffee, make a list. Make a list of each and every asset that you have. Write them all down and write down what you have available in that asset and even if that asset is liquidable. Is that a word liquidable? If you can take that asset and redeploy it. Sometimes there’s a penalty to do it. Sometimes you’ll get taxed. Don’t get taken by the terms penalties and taxes. Just think the pluses and minuses because if you redeploy that to something that performs better than minus can quickly become a plus. So write down your money markets, your stocks, your bonds, your savings accounts, life insurance, 401(k), IRA, gold, silver, anything that has the potential to give you a return or that should be giving you a return and then determine how hard is that asset working for you.
If the ROI is not acceptable to you being lower than your standard, start changing them out. Start jumping into an asset that produces a stronger return for you and one that you can control. I mean you can’t control the stock market, can you? If your money is parked in stock, I mean all you can do is put it in and take it out. But if you parked it in something you could control, like real estate. I mean it’s a game changer. Real estate, you control it. if you want tenant it, you decide if you want to rent it. You decide who your property management is. You decide which property you’re going to buy and who is going to tenant your property. You have complete control and guess what? Let’s just say that you could not stand your investment and you allow the tenant to move in, guess what?
You can ask your tenant to move out. Now, hopefully, you wouldn’t do that because your tenant is paying rent in your cash line, but if at the very worst you had to get rid of your asset, then you can sell your asset and there’s a very good chance that that piece of real estate that you purchase may have appreciated. Now, I never bank on appreciation. I mean the reality is nobody has a crystal ball to bank on appreciation. So here at Cash Flow Savvy, that’s just gravy for us. We bank on cash flow, but the point is you have control over it. That’s it for today, and while this lesson was short and sweet and super basic, I shared it because I wanted to get your wheels turning. So start analyzing those assets in your world that are not performing hard for you and turn them into assets that are performing harder. You never know your first or your next Turnkey property may perform five times better than what your money is doing for you right now. That’s it for today ladies and gentlemen, see you next week on the next episode of Turnkey Tuesdays.
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